If an economic change lowers the production cost of a commodity but does not reduce its market price, economic value will be created.

Question

Quizplus · Accepted Answer

When the production cost of a commodity is lowered, the profit margin of the seller increases, which creates economic value. If the market price remains the same, the seller can either increase their profit or pass some of the cost savings onto the consumer, which also increases economic value.

If an Economic Change Lowers the Production Cost of a Commodity